The guidelines for approved research institute (ARI) applicants explain whether an organisation can be endorsed by the ATO as a deductible gift recipient (DGR) under the general DGR category of 'Approved research institute'.
Make sure you understand all the requirements before you apply for ARI approval and DGR endorsement.
An organisation, or part of an organisation, is eligible for DGR endorsement under the category 'Approved Research Institute' if:
- it is an approved research institute
- it meets the general Deductible gift recipient eligibility requirements
- the 'In Australia' condition
- maintains a gift fund, if required
- an appropriate winding up and revocation clause
- from 14 December 2021, it is either
- an Australian government agency
- a registered charity with the ACNC
- or operated by an Australian government agency or a registered charity.
For more information, see DGRs required to be a registered charity.
An approved research institute (ARI) is either:
- the Commonwealth Scientific and Industrial Research Organisation (CSIRO)
- any university, college, institute, association or organisation that has been approved
An ARI may be:
- a registered charity, such as a public university or college
- a government authority
- an institution, association or organisation that is part of an entity, such as a section of a government department or a research institute that is operated by a public university.
The approving authorities are:
- National Health and Medical Research Council (NHMRC)
- Department of Education, Skills and Employment's Research and Higher Education Infrastructure Branch.
For a body (that is, a university, college, institute, association or organisation) to gain approval as an ARI it must:
- be a not-for-profit institution, association or organisation in Australia
- be undertaking scientific research which is, or may prove to be, of value to Australia
- have a suitably qualified research committee that evaluates the merits of proposed research programs and determines how any research funds held are applied to research purposes
- have an administrative structure capable of, and responsible for, the management of gifts to ensure that they are used only for scientific research
- have all tax-deductible gifts for this purpose accounted for separately and used exclusively for scientific research
- have an appropriate winding up and revocation clause that ensures in the event of winding up or upon revocation of endorsement as a DGR, any surplus remaining is to be transferred to an institute with similar objects and entitled to receive tax-deductible gifts.
Sample winding up and revocation clauses are available, depending on if you are:
An ARI is any institute which is approved in writing for undertaking scientific research which is, or may prove to be, of value to Australia.
Scientific research means any activity in the fields of natural or applied science for the extension of knowledge.
Definitions (for the purposes of an ARI application) include:
- Natural science is the study of material phenomena of animate and inanimate things, including subjects such as physics, chemistry, biology, astronomy.
- Applied science is the application of some branch of science for the solution of practical problems (it is not confined to the natural sciences).
- Extension of knowledge is an extension of or addition to the sum total of knowledge, not an extension of the field over which knowledge already known is spread. The definition does not include activities relating to the dissemination of existing knowledge such as the provision of scholarships for students, the organisation of conferences, congresses and symposia and the publication of information (other than the results of the ARI's own research work, undertaken through this program).
To gain ARI status it is necessary to have a research committee of at least five people, the majority of whom are appropriately qualified in the field of research that is to be undertaken or have appropriate experience in reviewing research.
The research committee must take sole responsibility for ensuring that the research undertaken is scientific in nature and that it is, or may prove to be, of value to Australia.
The research committee must have effective control over the disbursement of funds within the institute's research fund account.
Membership of the committee is subject to the prior approval of the approving authority. Individuals should:
- be nominated based on their proven ability to direct a research program, as evidenced by their academic qualifications and professional appointments
- have consent from all other research committee members
- give their consent to join the research committee.
All subsequent changes in the membership of a committee require the prior approval of the approving authority.
The institute's documentation should make clear that it is the research committee that has the power to determine the research activities which are to be funded from the research fund.
Conducting research and sub-contracting
To gain ARI approval, institutes should conduct their own research. However, they will be able to sub-contract out a portion of their research to appropriately qualified researchers or research bodies. In such circumstances, all of the following conditions must be met:
- The institute retains control over the research being conducted by the contractor.
- The institute retains effective ownership of the results of the research.
- The institute identifies the research work that will be contracted out and satisfies the approving authority of the need to outsource that work to meet research objectives.
When research activities are carried out by or on behalf of an institute, it is expected that the institute (via the research committee) will have and exercise proper control over the conduct of those activities.
Essential elements of control of the conduct of research activities are the capacity to decide on major changes of direction in those activities, the ability to stop an unproductive line of research, the scope to follow up or otherwise on an unexpected result and, ultimately, the power to end a project.
Retains effective ownership
The institute must have effective ownership of the results of research activities. Where activities are carried out by or on behalf of an institute, they generally get results which they can effectively own.
Some theoretical rights of ownership may be given to others without denying this effective ownership of the institute. For example, an institute that has contracted out research activities may permit the researcher certain rights of scientific publication. The institute would nevertheless be the effective owner of the results and would be required to make them available to all interested parties on equal terms.
The approving authority will seek additional information from the applicant if required to make a full assessment of eligibility for ARI approval.
Publication of results of research
An ARI must openly publish the results of their research, in the scientific and technical press. Any Australian patents issued during such research should be made available to all interested parties, on equal terms.
The approving authorities require a separate research fund account to be kept and all gifts, deductible contributions and money related to them be paid into this account. You need to organise an independent audit of the research fund account annually.
An ARI must ensure all gifts received be used exclusively for the purpose of approved scientific research in the fields of natural or applied science. The institute needs to account for the use of these gifts.
An organisation endorsed as a DGR for the operation of an ARI must maintain a gift fund for DGR purposes. The research fund account can also be the gift fund, as long as it meets the requirements of a gift fund.
There are two ways to apply for DGR endorsement:
- If you will be applying for registration as a charity with the Australian Charities and Not-for-profits Commission (ACNC), you can apply to us for DGR endorsement on the ACNC's registration application form.
- If you are an Australian government agency or already registered as a charity, you can apply directly to us for DGR endorsement – complete and submit all of the following: